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Fiscal Research Division
Fiscal Brief
When the 2011 General Assembly convened in
January, they were confronted with the loss of $1.6
billion in federal American Recovery and
Reinvestment Act (ARRA) funds, $1.3 billion in
expiring temporary taxes and another $800 million in
estimated funding needs - a budget gap preliminarily
estimated at $3.7 billion. By March, improvements in
the State’s slowly-recovering economy, lower than
expected funding needs for enrollment growth in
public education and Medicaid, and further refinement
of the estimate for the State Health Plan brought the
gap to $2.6 billion.1
The legislature took steps early on to address the gap,
enacting Senate Bill 109 (Session Law 2011-15),
directing Governor Beverly Perdue to increase
reversions from the current operating budget by $538
million. That action, along with $2 billion in
reductions primarily in education and Medicaid,
helped close the gap. On June 4th, 2011, House Bill
200 was ratified, appropriating $19.7 billion in
General Fund spending for FY 2011-12. Governor
Beverly Perdue vetoed the bill on June 12th but the
General Assembly overrode the veto and House Bill
200 (S.L. 2011-145, Appropriations Act of 2011)
became law on June 15, 2011.
This brief summarizes the General Assembly’s major
budgetary actions to close the $2.6 billion gap,
reorganize and consolidate government, and to reform
the State’s justice system.
The General Assembly enacted a $19.7 billion budget
for FY 2011-12, closing a $2.6 billion budget gap
using a combination of adjustments to General Fund
availability (36%) and spending reductions (64%).
1 For a history of the budget gap, click on Fiscal Year
2011-12 Budget Gap
As Figure 1 shows education and health and human
services received the majority of State appropriations.
The consensus forecast maintained a cautious
approach to the State’s revenue outlook, not allowing
modest improvements over the last year to influence
overall expectations.
In February economists in the Fiscal Research
Division and the Office of State Budget and
Management issued the annual consensus forecast.
Baseline revenue would grow 4.6 percent to $18.8
billion for FY 2011-12, enough to offset nearly $1
billion of the $1.3 billion in expiring temporary sales
and income taxes.
The $18.8 billion represents a decline of $336.1
million from the previous year’s collections. That
decline, along with the uncertainty surrounding the
pace of growth in the economy, including weaknesses
and instability in the housing and employment
markets, furthered strengthened the State’s position
that a full economic expansion during the next
biennium was improbable.
General Fund revenues are forecast to grow 5.6
percent in FY 2012-13.
Education
56%
Health &
Human
Services
23%
Justice &
Public
Safety
12%
Natural &
Economic
Resources
2%
Gen
Government
2%
Reserves &
Capital
5%

Fiscal Research Division
Fiscal Brief
When the 2011 General Assembly convened in
January, they were confronted with the loss of $1.6
billion in federal American Recovery and
Reinvestment Act (ARRA) funds, $1.3 billion in
expiring temporary taxes and another $800 million in
estimated funding needs - a budget gap preliminarily
estimated at $3.7 billion. By March, improvements in
the State’s slowly-recovering economy, lower than
expected funding needs for enrollment growth in
public education and Medicaid, and further refinement
of the estimate for the State Health Plan brought the
gap to $2.6 billion.1
The legislature took steps early on to address the gap,
enacting Senate Bill 109 (Session Law 2011-15),
directing Governor Beverly Perdue to increase
reversions from the current operating budget by $538
million. That action, along with $2 billion in
reductions primarily in education and Medicaid,
helped close the gap. On June 4th, 2011, House Bill
200 was ratified, appropriating $19.7 billion in
General Fund spending for FY 2011-12. Governor
Beverly Perdue vetoed the bill on June 12th but the
General Assembly overrode the veto and House Bill
200 (S.L. 2011-145, Appropriations Act of 2011)
became law on June 15, 2011.
This brief summarizes the General Assembly’s major
budgetary actions to close the $2.6 billion gap,
reorganize and consolidate government, and to reform
the State’s justice system.
The General Assembly enacted a $19.7 billion budget
for FY 2011-12, closing a $2.6 billion budget gap
using a combination of adjustments to General Fund
availability (36%) and spending reductions (64%).
1 For a history of the budget gap, click on Fiscal Year
2011-12 Budget Gap
As Figure 1 shows education and health and human
services received the majority of State appropriations.
The consensus forecast maintained a cautious
approach to the State’s revenue outlook, not allowing
modest improvements over the last year to influence
overall expectations.
In February economists in the Fiscal Research
Division and the Office of State Budget and
Management issued the annual consensus forecast.
Baseline revenue would grow 4.6 percent to $18.8
billion for FY 2011-12, enough to offset nearly $1
billion of the $1.3 billion in expiring temporary sales
and income taxes.
The $18.8 billion represents a decline of $336.1
million from the previous year’s collections. That
decline, along with the uncertainty surrounding the
pace of growth in the economy, including weaknesses
and instability in the housing and employment
markets, furthered strengthened the State’s position
that a full economic expansion during the next
biennium was improbable.
General Fund revenues are forecast to grow 5.6
percent in FY 2012-13.
Education
56%
Health &
Human
Services
23%
Justice &
Public
Safety
12%
Natural &
Economic
Resources
2%
Gen
Government
2%
Reserves &
Capital
5%